Loan Interest for Capital Mobilization in PPP Projects

Circular 88 stipulates that the interest on mobilized investment capital loans is calculated in the financial plan of a PPP project based on the committed loan amount and the capital mobilization schedule in the project contract; interest on loans during the construction period is included in the total investment amount of the PPP project.

- The interest on mobilized investment capital loans only applies to the portion of capital that investors must borrow; loan interest is not calculated for the equity portion of the investor's commitment in the project contract.- The loan interest calculation period starts from the time the first loan disbursement is made and does not exceed the project implementation period as stipulated in the project contract.

Additionally, Circular 88 also stipulates that the authority approving the Pre-feasibility Study Report, Feasibility Study Report decides and is responsible for the loan interest rates, principles, and conditions for adjusting loan interest rates in the financial plan of the PPP project based on reference but not exceeding the following interest rates:

- The average of the medium and long-term loan interest rates of three commercial banks: Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Joint Stock Commercial Bank for Industry and Trade of Vietnam (Vietinbank);- The prevalent medium and long-term loan interest rates of the commercial banking system as announced by the State Bank of Vietnam on the portal of the State Bank of Vietnam (if any);- Loan interest rates of similar projects (if any);- The loan interest rates stipulated in Points a and b of this Clause are determined at the nearest time within 03 months before the approval of the Pre-feasibility Study Report and the Feasibility Study Report.

Note in the case of investor appointment: the competent state authority shall submit to the authority for approval the loan interest rate in the financial plan of the PPP project but shall not exceed the lowest loan interest rate.

See details at Circular 88/2018/TT-BTC effective from November 12, 2018.

-Thao Uyen-

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